August 13, 2007

Turn the funnel upside down

The way brands are being built now is dramatically different than 5 years ago.

The name of the game is conversation, getting consumers to talk with each other. Getting micro-segments to adopt the brand as part of its identity. Collecting a group of consumers who feel that the brand is giving them something of value, far greater for that which they’ve paid. Something that is helping them and adding to their lives. Sounds like a something a friend would do, doesn’t it?

So as we’re in the midst of the vastly expanding context of social media, consumers who opting out of advertising and searching for meaningful content, the decreasing effectiveness of mass media and people who are finding connections with others based on their lifestyles (and dare I say brands they dig), what should we as marketers do?

Let’s start with what we shouldn’t do. Awareness is no longer the foundation for success. The long-standing model that has served as both the framework and the success metric for marketers is the purchase funnel. This model is based upon the principle of subtraction: the idea that if a brand reaches 100 consumers frequently enough with a persuasive proposition, 3 to 10 of them will purchase. That’s inconsistent with how consumers are operating in today’s market. Now, communications model must factor in the principle of multiplication. Instead of finding ways to interrupt and disrupt consumers’ lives, we should be looking for ways to attract consumers, offer them something of value through our communications, and befriend them.

Advocacy is the name of the game. That’s how so many of today’s most profitable and growing brands are operating. Just look at Mini, Method, Nordstrom’s, Starbucks and Guinness. Instead of focusing on reaching a critical mass of consumers and creating massive levels of awareness, they are finding ways to fuel loyalty and advocacy. They are adding value to the lives of people through both their product experience and their communications. And they have created their own culture and are becoming symbols of social cultures that matter to people.

I saw Eric Ryan, co-founder of Method Products, talk at the 4A’s conference recently. He said that his immediate goal was to spend all of his marketing dollars on loyalty. Keep in mind that he has the youngest brand in an over hundred year old category with some of the most well known brands in the country. Conventional wisdom suggests that he needs to focus on awareness and trial.

So what does turning the funnel upside down mean?

Speak to the people who matter most
It means targeting those who are most likely to be evangelists for the brand. This may not be those who represent the most immediate sale, it means those who represent “good profits” as so eloquently defined by our friend Fred Reichfeld in his book, “The Ultimate Question.” Instead of trying to group a mass of people together and shout at them, look at the world as many micro-segments and think of ways to ignite them with your brand and your communications.

Embrace complexity
It’s not that I think the principle of KISS is dead. But I definitely think it can’t be as widely applied any longer. I think that sometimes we mistake KISS for Laziness. Complexity means more work for marketers. It means embracing multiple messages, mediums and the idea that your message is no longer completely under your control. That’s a problem for many of us because we’re still trying to sell something to a mass audience. Instead, we should be finding ways to fuel conversation about our brands and to create something of meaning that they can carry to others. Gareth Kay in his “Seven Deadly Sins” presentation at the 4A’s account planning conference had an excellent presentation about embracing complexity and creating energy in the market.

Speak with and treat consumers like people
One of the founding principles of this blog is that consumers are tired of being sold; they want brands that behave more like helpful friends then evil marketers. That means changing the rules of marketing and adopting the rules of social psychology and interpersonal skills. So as you’re planning ways to market your brand, think about the stages of coming together as outlined by social psychologist Mark Knapp for example. Understand how your communications can operate to befriend people instead of selling to a group of people defined by their consumption.

Facilitate multiplication
OK, I admit that this is a loaded implication. But it does matter. In it’s most basic sense, this suggests that the purpose of marketing is to generate conversation between consumers about your brand. That’s a big shift in thinking. The most obvious implication is that we need to rethink the role of media and the objectives we have for it. For instance, use TV less as an image management device and more as a way to fuel a viral effort and attract consumers to a digital medium where conversation can commence and ideas can spread more easily.

Brands that are viewed as close friends to people are more successful. As part of my day job, I recently fielded a study of 128 brand to explore this hypothesis. Most of the brands I listed above were in this study. They enjoy more loyalty, commitment and a higher rate of recommendation and purchase intent than other brands. All of these brands are changing the rules of marketing in their respective categories. They are befriending consumers. Turning the funnel upside down is a big part of their success.

Thoughts, ideas, contrary positions? Let’s talk.

Update: Check out another view, called the Marketing Spiral. Another interesting take.